Business in the Global Legal
After reading this chapter, you should understand the foundational concepts of business in the global
environment. You will learn about why it is important to understand the global legal environment, as
well as some of the sources of international law that pertain to business. You will examine the concept of
sovereignty and the unique challenges that concept poses, speciﬁcally in relation to ethical questions
arising in the international business context. You will explore concepts critical to conducting business in
the international environment, including trade regulations, international contract formation, and
prohibited activities. At the conclusion of this chapter, you should be able to answer the following
Why is the global legal environment important to all businesses?
What is international law?
What laws are relevant to businesses operating internationally?
What are some current ethical issues associated with the global environment of business?
What legal considerations exist with respect to trade regulations, international contract
formation, employment and human rights issues, and prohibited activities in the interna-
It’s a globalizing world. If you are considering starting a small business, it may not occur to you to
consider exporting your product. However, according to the Small Business Association, 96
percent of the world’s potential customers live outside of the United States.
So what’s stopping
you? Maybe you are not sure how to negotiate a contract with a supplier or manufacturer
overseas. Or maybe you are uncertain about U.S. laws relating to importing and exporting. The
international market is lucrative, though the legal environment for operating in that forum is
diﬀerent from that for a business that operates exclusively within the borders of the United States.
For this reason, it is important to be familiar with some of the basic concepts of doing business in
the global economy.
You may be acquainted with challenges faced by U.S. businesses and workers when considering the questions
associated with this new business environment. When we shop for food, computers, clothing, pet food,
automobiles, or just about anything produced for the global market, we might very well purchase a ﬁnal product
from a diﬀerent country, or a product composed of components or labor from many diﬀerent parts of the world.
Economists tell us that this represents the most eﬃcient method of production and labor. After all, if a business can
pay $1 per hour to a worker overseas, why would it choose instead to pay $12 per hour to a U.S. worker?
Of course, it’s not necessarily a sunny picture for people whose jobs have been outsourced. Additionally,
businesses operating in the international environment face unique questions. For instance, if the new labor force